-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IB731vLGSAUWyHBSiMAwUV+STO1FcEdf0+AOdnag5evhPqEEqOLm6JebN822Y1l7 78bWUvrDmOeGjhm0QzBtHA== 0000912057-00-011510.txt : 20000315 0000912057-00-011510.hdr.sgml : 20000315 ACCESSION NUMBER: 0000912057-00-011510 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000129 FILED AS OF DATE: 20000314 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HORMEL FOODS CORP /DE/ CENTRAL INDEX KEY: 0000048465 STANDARD INDUSTRIAL CLASSIFICATION: MEAT PACKING PLANTS [2011] IRS NUMBER: 410319970 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-02402 FILM NUMBER: 569400 BUSINESS ADDRESS: STREET 1: 1 HORMEL PL CITY: AUSTIN STATE: MN ZIP: 55912-3680 BUSINESS PHONE: 5074375737 MAIL ADDRESS: STREET 1: 1 HORMEL PLACE CITY: AUSTIN STATE: MN ZIP: 55912-3680 FORMER COMPANY: FORMER CONFORMED NAME: HORMEL GEO A & CO DATE OF NAME CHANGE: 19920703 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended January 29, 2000 Commission File Number 1-2402 HORMEL FOODS CORPORATION Incorporated Under the Laws of the State of Delaware Fein #41-0319970 1 Hormel Place Austin, Minnesota 55912-3680 Telephone - (507) 437-5737 None - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant. was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES /XXX/ NO / / Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date.
Class Outstanding at January 29, 2000 - -------------------------------------------------------------------------------- Common Stock $.0586 par value 141,507,800 (post split) Common Stock Non-Voting $.01 par value -0-
Pages: This report contains eleven pages numbered sequentially from this cover page. FORM 10-Q STATEMENTS OF FINANCIAL POSITION (In Thousands of Dollars) HORMEL FOODS CORPORATION
January 29, October 30, 2000 1999 ----------- ----------- (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 150,354 $ 188,310 Short-term marketable securities-- at cost which approximates market 67,576 60,252 Accounts receivable 232,621 266,059 Inventories 267,150 270,239 Deferred income taxes 10,019 9,526 Prepaid expenses 37,106 5,757 ----------- ----------- TOTAL CURRENT ASSETS 764,826 800,143 DEFERRED INCOME TAXES 61,204 60,051 INTANGIBLES 97,023 98,544 INVESTMENTS IN AFFILIATES 141,135 142,879 OTHER ASSETS 86,835 78,344 PROPERTY, PLANT AND EQUIPMENT Land 13,385 13,108 Buildings 289,014 286,662 Equipment 664,191 652,723 Construction in progress 53,607 49,693 ----------- ----------- 1,020,197 1,002,186 Less allowance for depreciation (507,541) (496,562) ----------- ----------- 512,656 505,624 $ 1,663,679 $ 1,685,585 =========== ===========
See notes to financial statements FORM 10-Q STATEMENTS OF FINANCIAL POSITION (In Thousands of Dollars) HORMEL FOODS CORPORATION
January 29, October 30, 2000 1999 ----------- ----------- (Unaudited) LIABILITIES AND SHAREHOLDERS' INVESTMENT CURRENT LIABILITIES Accounts payable $ 164,688 $ 162,585 Accrued expenses 31,238 37,255 Accrued marketing 42,170 34,882 Employee compensation 36,698 73,050 Taxes, other than federal income taxes 0 12,333 Dividends payable 12,547 11,902 Federal income tax 35,636 12,186 Current maturities of long-term debt 39,315 41,214 ----------- ----------- TOTAL CURRENT LIABILITIES 362,292 385,407 LONG-TERM DEBT--less current maturities 177,070 184,723 ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION 252,523 252,236 OTHER LONG-TERM LIABILITIES 25,007 22,077 SHAREHOLDERS' INVESTMENT Preferred Stock, par value $.01 a share-- authorized 80,000,000 shares; issued--none Common Stock, non-voting, par value $.01 a share-- authorized 80,000,000 shares; issued--none Common Stock, par value $.0586 a share-- authorized 400,000,000 shares; issued 141,507,800 shares Jan. 29, 2000 issued 142,724,870 shares Oct. 30, 1999 8,292 8,364 Accumulated other comprehensive loss (7,231) (6,305) Retained earnings 845,726 839,083 ----------- ----------- TOTAL SHAREHOLDERS' INVESTMENT 846,787 841,142 ----------- ----------- $ 1,663,679 $ 1,685,585 =========== ===========
See notes to financial statements FORM 10-Q STATEMENTS OF EARNINGS (In Thousands, Except Per Share Amounts) HORMEL FOODS CORPORATION
Three Three Months Ended Months Ended January 29, January 30, 2000 1999 --------------- --------------- Sales, less returns and allowances $ 903,913 $ 799,005 Cost of products sold 640,832 557,240 --------- --------- GROSS PROFIT 263,081 241,765 Expenses: Selling and delivery 94,889 86,799 Marketing 84,977 78,014 Administrative and general 16,494 18,535 --------- --------- OPERATING INCOME 66,721 58,417 Other income and expenses: Other income--net 6,052 5,474 Equity in earnings of affiliates (666) 4,760 Interest expense (3,561) (2,933) --------- --------- EARNINGS BEFORE INCOME TAXES 68,546 65,718 Provision for income taxes 24,698 23,338 --------- --------- NET EARNINGS $ 43,848 $ 42,380 ========= ========= NET EARNINGS PER SHARE (BASIC) $ 0.31 $ 0.29 ========= ========= NET EARNINGS PER SHARE (DILUTED) $ 0.30 $ 0.29 ========= =========
See notes to financial statements FORM 10-Q CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of Dollars) HORMEL FOODS CORPORATION
Three Three Months Ended Months Ended January 29, January 30, 2000 1999 --------------- --------------- OPERATING ACTIVITIES Net earnings $ 43,848 $ 42,380 Adjustments to reconcile to net cash provided by operating activities: Depreciation 14,584 14,997 Amortization of intangibles 1,521 1,737 Equity in earnings of affiliates 666 (4,760) Provision for deferred income taxes (1,646) (422) (Gain) loss on property/equipment sales 240 275 Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 33,438 13,783 (Increase) decrease in inventories and prepaid expenses (28,260) (22,467) Increase (decrease) in accounts payable and accrued expenses (18,644) 3,985 --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES 45,747 49,508 INVESTING ACTIVITIES Sale of held-to-maturity securities 14,589 11,720 Purchase of held-to-maturity securities (21,913) (21,444) Purchases of property/equipment (22,298) (12,062) Proceeds from sales of property/equipment 442 281 (Increase) in investments, equity in affiliates, and other assets (8,339) (27,850) --------- --------- NET CASH USED IN INVESTING ACTIVITIES (37,519) (49,355) FINANCING ACTIVITIES Proceeds from long-term borrowings 1,838 22,616 Principal payments on long-term debt (9,601) (29) Dividends paid on Common Stock (11,844) (11,756) Stock Repurchase (25,030) (2,046) Other (1,547) 170 --------- --------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (46,184) 8,955 --------- --------- (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (37,956) 9,108 Cash and cash equivalents at beginning of year 188,310 203,934 --------- --------- CASH AND CASH EQUIVALENTS AT END OF QUARTER $ 150,354 $ 213,042 ========= =========
See notes to financial statements FORM 10-Q NOTES TO FINANCIAL STATEMENTS (UNAUDITED) HORMEL FOODS CORPORATION NOTE A In the opinion of the Company, the accompanying unaudited financial statements contain all adjustments (consisting of only normal recurring accruals) necessary for a fair presentation. The accounting policies followed by the Company are set forth in Note A to the Company's Financial Statements in the 1999 Hormel Foods Corporation Annual Report to Shareholders, which is incorporated by reference on Form 10-K. NOTE B The results of operations for the three month periods ended January 29, 2000 and January 30, 1999 are not necessarily indicative of the results to be expected for the full year. NOTE C The Company reports comprehensive income as defined by the Statement of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income". Total comprehensive income (net income plus other comprehensive income) was $42,922 and $42,410 for the three month periods ended January 29, 2000 and January 30, 1999, respectively. NOTE D The following table sets forth the denominator for the computation of basic and diluted earnings per share:
Three Months Ended ------------------ January 29, 2000 January 30, 1999 ---------------- ---------------- Denominator for basic earnings per share - weighted-average shares 142,341,751 146,899,396 Dilutive potential common shares 1,447,948 874,874 ------------- ------------- Denominator for diluted earnings per share - adjusted weighted-average shares and assumed conversions 143,789,699 147,774,270 ============= =============
FORM 10-Q MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (In Thousands except share amounts) HORMEL FOODS CORPORATION RESULTS OF OPERATIONS Operating earnings for the first quarter of fiscal 2000 increased 13.7 percent to $43,848 from $38,572 in 1999. Including a one-time gain, net of taxes, from the sale of land by Campofrio Alimentacion, S.A., a Spanish food company in which Hormel has a 21.4 percent ownership interest, total reported earnings for the first quarter of 1999 were $42,380. Dollar sales for the quarter increased $104,908 to $903,913 on a tonnage volume gain of 5.4 percent when compared to the same period last year. The Company's core Hormel business continues to be the major contributor to earnings and volume growth. Hog processing levels within the Company increased 2.1 percent for the current quarter compared to 1999 despite a 4.3 percent decline in the total National Federally Inspected processing numbers for the same period. Hog contracts continued to ensure a quality supply of hogs during a period of some herd liquidation and enabled the Company to operate facilities at optimum capacity. Any difference between the prices for hogs purchased under procurement contracts compared to prices paid on the quoted spots market are reflected in current operating results. The Refrigerated Group which includes the Pork Operations unit, Meat Products unit and Foodservice unit experienced volume growth across all units. The Meat Products unit tonnage volume increased 11.3 percent compared to last year with the expansion of the Always Tender-Registered Trademark- fresh pork brand a major contributor with tonnage up 27.0 percent. Record ham sales for the Christmas holiday contributed to a 14.0 percent increase for processed meats for the quarter over 1999. The introduction of Always Tender-Registered Trademark- entrees during the quarter was well received and added to the Company's already strong position in the refrigerated meat case. The Foodservice unit of the Refrigerated Group had volume growth of 17.0 percent for the first quarter compared to last year. Branded tonnage increased 13.8 percent over 1999. Significant category gains during the quarter included precooked bacon up 19.0 percent, Bread Ready Meats up 18.0 percent, pork sausage up 24.0 percent and premium bacon up 16.0 percent. In the Prepared Foods Group, the Grocery Products unit tonnage volume increased 10.7 percent over 1999. Mass merchandisers and club store business remained very strong with first quarter sales volume up 45.0 percent. The El Torito-Registered Trademark- brand continues to perform well in southern California. The product offerings of the El Torito-Registered Trademark- line is being expanded to include Sweet Corn Cake and Fajitas in a frozen state for club stores. Introduction of El Torito-Rsalsas has begun in northern California. In January, two new microwave items were introduced in the Dinty Moore American Classics-Registered Trademark- line and one new microwave item under the Kid's Kitchen-Registered Trademark- brand. The Carapelli-Registered Trademark- Olive Oil launch is proceeding as planned. The acceptance rate is higher than projected with most accounts placing 6 to 7 items. Product should be on store shelves by mid-March. FORM 10-Q Turkey volume for Jennie-O in the first quarter increased slightly from last year as the Company continued to focus on increasing its mix of value-added products. Jennie-O-Registered Trademark- turkey franks have moved past Louis Rich as the national leader in the turkey frank category. Breeder hen inventories, turkey egg sets and poult placements are expected to be relatively flat for the remainder of the year. This could place further pressure on industry freezer inventories which have been running 10-14 percent below year-ago levels. International sales volume increased 53 percent for the quarter compared to 1999. The growth was across most product categories and was led by a 67 percent increase in fresh and frozen pork volume. Chinese style hams were introduced in the Beijing and Shanghai markets in January and are receiving a good acceptance. Selling and delivery expenses for the quarter were 10.5 percent of sales compared to 10.9 percent in 1999. Marketing expenses for the quarter were $84,977 or 9.4 percent of sales compared to $78,014 or 9.8 percent of sales last year. The change in both expense classifications reflects the effect of sales dollar growth in 2000. Administrative and general expenses were $16,494 or 1.8 percent of sales compared to $18,535 or 2.3 percent of sales for the same period of 1999. The decline in actual dollars was due primarily to a write-down of an idle facility during the first quarter last year. Sales dollar growth in 2000 also impacted the percentage of sales change. The effective tax rate for the first quarter of 2000 was 36.0 percent compared to 35.5 percent last year. The Company expects the rate to hold relatively stable for the remainder of the year. FORM 10-Q LIQUIDITY AND CAPITAL RESOURCES Ratio comparisons for the first quarter of 2000 and 1999, which demonstrate the Company's financial strength, are as follows:
End of Quarter ----------------------------- 1st Quarter 1st Quarter 2000 1999 -------------- ------------- Liquidity Ratios Current ratio 2.1 2.7 Receivables turnover 14.5 14.8 Days sales in receivables 23.5 days 23.9 days Inventory turnover 9.5 9.2 Days sales in inventory 38.0 days 40.2 days Leverage Ratio Long-term debt to equity 25.6% 27.8% Operating Ratios Pre-tax profit to net worth 32.5% *31.8% Pre-tax profit to total assets 16.4% *16.6%
* Includes $3,808 in pre-tax profit from sale of land by Campofrio. Changes during the first quarter in current asset and liability balances followed normal seasonal patterns. Accounts receivable and inventory balances are consistent with the price levels for pork and past and future sales volumes. During the quarter, the Company invested $22,298 in new plant and equipment primarily in Houston, Texas; Austin, Minnesota; and Rochelle, Iowa. Investment in plant and equipment continues to emphasize productivity gains and efficient product flow while improving ergonomics and safety conditions for employees. The Company continues to keep excess funds invested short-term. The leverage ratio indicates that significant borrowing capacity remains to take advantage of business opportunities that may arise through acquisition or internal expansion. During the first quarter of fiscal 2000, 1,234,400 shares (post split) were purchased under the share repurchase program at an average price per share of $20.27. FORM 10-Q FORWARD-LOOKING STATEMENTS The Company and its representatives may from time to time make written or oral statements with respect to annual or long-term goals and expectations of the Company. These statements include but are not limited to the Company's filings with the Securities and Exchange Commission and in its reports to shareholders. The Company cautions readers not to place undue reliance on forward-looking statements, which represent current views as of the date made. Exhibit 99 to the Annual Report on Form 10-K for year ended October 30, 1999 provides the full text of the Company's cautionary statement relevant to forward-looking statements and information for the purpose of "Safe Harbor" provisions of the Private Securities Litigations Reform Act of 1995. FORM 10-Q PART II - OTHER INFORMATION HORMEL FOODS CORPORATION Item 4. Results of Votes of Security Holders. At the Annual Meeting of Shareholders on January 25, 2000 the proposal to approve the Hormel Foods Corporation 2000 Stock Incentive Plan was approved. FOR AGAINST ABSTAIN ---------- --------- --------- 49,598,244 8,073,111 3,737,399 At the Annual Meeting of Shareholders on January 25, 2000 the proposal to amend the Company's Restated Certificate of Incorporation to increase the number of authorized shares of Common Stock and reduce the par value to effect a stock split, and to increase the number of authorized shares of Nonvoting Common Stock and Preferred Stock was approved. FOR AGAINST ABSTAIN ---------- --------- --------- 48,722,716 9,191,094 3,494,944 Item 6. Exhibits and Reports on Form 8-K The Company filed a Form 8-K on December 9, 1999 announcing that the Board of Directors at their November 22, 1999 regular meeting authorized a two-for-one split of its Common Stock subject to shareholder approval at the Annual Meeting. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. HORMEL FOODS CORPORATION ------------------------ (Registrant) Date: March 14, 2000 By /s/ D. J. HODAPP ---------------------- ------------------------------ D. J. HODAPP Executive Vice President and Chief Financial Officer Date: MARCH 14, 2000 By /s/ J. N. SHEEHAN ---------------------- ------------------------------ J. N. SHEEHAN Treasurer
Hormel Foods Corporation Exhibit 27 -- Financial Data Schedule Article 5 of Regulation S-X Multiplier 1,000 Period Type 3 months Fiscal Year-End 10/28/00 Period End 1/29/00 Cash $150,354 Securities 67,576 Receivables 232,621 Allowances 0 Inventory 267,150 Current Assets 764,826 P P & E 1,020,197 Acc. Depreciation (507,541) Total Assets 1,663,679 Current Liabilities 362,292 Bonds & Debt 177,070 Common Stock 8,292 Preferred - mandatory 0 Preferred Stock 0 Other Shareholder Equity 0 Total Liabilities & Equity 1,663,679 Sales 903,913 Total Revenues 903,913 COGS 640,832 Total Costs 640,832 Other Expenses 0 Loss Provision 0 Interest Expense 3,561 Interest on Debt Discount 0 Income - Pretax 68,546 Income Taxes 24,698 Income from Cont. Op. 43,848 Discontinued Oper. 0 Extraordinary Items 0 Cumulative Eff. Changes 0 Net Income 43,848 EPS - Basic $0.31 EPS - Diluted $0.30
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